State officials say this Abundance document shows a classic pyramid scheme lay-out. The constellation required eight new âstarâ members to each put in $5,000 in hopes of rising to moon, planet and finally, sun, when theyâd receive $40,000 -- or a 700 percent return. Each time a sun gets paid, the 14 remaining split into two groups, move up a notch and work to bring in another eight new members. The fact the group needs a constant stream of new, paying members to achieve the payout makes it a pyramid scheme. The Oregon Department of Justice

A half-dozen naturopaths came together within the past few years for what they considered an empowerment movement that supported fellow female entrepreneurs and the local economy.

More than 50 women signed on, paying $5,000 apiece in hopes of eventually collecting $40,000 from the group and its spinoffs, known variously as Operation Abundance, Women's Gifting Circle, Women's Financial Circle and Women's Financial Collective.

The Oregon Department of Justice calls it something else entirely: a pyramid scheme.

A twist on the old-school fraud that benefits a few at the top and leaves most others unpaid, the local Abundance circle collected a total of $260,000 from young, highly educated professionals, mostly in the Portland area.

Avoid the pyramid

Under a classic pyramid scheme, members must pay to join and only profit if enough new members are recruited and pay in. In assessing any investment or gifting club, you should:

Know how it works: Ask where (or to whom) the money is going and exactly how long it will take to recoup the investment. Don't be fooled by clever charts or diagrams.

Crunch the numbers: Groups selling products may not seem like pyramid schemes, yet they can be if there are not enough sales to cover the payouts to the people at the top. Such entities may still rely on recruitment and joining fees.

Look for transparency: Being asked to keep quiet about the club, your payments and its rules are red flags.

Department of Consumer and Business Services at 503-378-4100 or read up.

--Laura Gunderson

Usually, when the DOJ trumpets a scheme that it's taken down, the perpetrators were well aware of their actions. In this case, however, even the state's investigator agrees that the women -- highly educated professionals -- had no idea what they were doing was illegal. In fact, it took a while to convince them. And that, The Desk felt, was a good reason to remind others out there to be skeptical of gifting and investment clubs they may be invited to join or, for that matter, that they're already in.

Four of the group, all licensed naturopathic physicians practicing in Portland, recently reached agreements with the state to return all members' "investments," according to the state. They also promised to end their involvement with Abundance or any other gifting club or financial cooperative.

Amy Margolis, a lawyer representing Kelly Jennings, said her client is a well-respected practitioner who earned her bachelor's degree in neuroscience from Amherst College and went on to help breast cancer patients and later, traveled to Haiti to help victims of a major earthquake in 2010. Margolis said Jennings joined the group late and had no idea what she was doing was illegal until she was contacted by the DOJ.

"This was a group of women who are all wonderful, giving women who came together to bring money together that could help everyone in the group," said Margolis, describing the group as a "sisterhood."

"If those women, who all are still friends, could hug each other and make this go away they would have, or lit some sage or something."

Of the four women who signed agreements with the state, only Jennings must pay a $15,000 fine in addition to restitution. The others got their fines waived as long as they honored their contracts. Margolis would not comment on why Jennings was the only one facing a fine.

If Jennings violates her agreement she'll be fined an additional $10,000.

The women who signed the agreements maintain there was no pyramid scheme because new members were not required to recruit others, said Gay Stender, a DOJ investigator who's researched pyramid schemes for the state for about 10 years. Also they said money was "gifted" and that each member had signed a form stating she had no expectation of a return.

Doesn't matter.

In the state's view, a pyramid scheme is any group that promises a payout that can only be achieved if new members join and hand over cash.

"It boils down to basic math," Stender said. "Just watch one cycle of a group, and you realize that you'll have eight investors losing money for one person who receives cash. And by doing the computations, you will quickly exceed a population who can pay within any geographic area."

The state's investigation of Abundance was further complicated by the fact that some members are convinced of its legitimacy and know that shutting it down ensures no chance of a payback. Stender said she hopes eliminating this local Abundance circle will put a stop to any other offshoots that could be in the works elsewhere.

Most pyramid schemes rely on secrecy, with members asking for payments in cash that's kept out of banks and not discussed with outsiders. When a group is investigated, Stender said, members tend to shield one another to protect their investment.

The Abundance group was divided into four tiers: stars, moons, planets and suns. New members, or stars, "gifted" $5,000 to the woman in the highest, or sun, position. When eight stars had joined -- and the sun's take totaled $40,000 -- everyone in the group moved up to a higher level and split off into smaller groups, awaiting other stars to join and pay.

The idea mirrors countless other efforts over the years with such names as Dinner Club, in which levels were distinguished by various meal courses, or the Airplane Game, in which members take off from the passenger position and make their way up to captain.

Pyramid schemes are often built up from within smaller communities, be it friends, family or professional groups. In the naturopaths' case, the state said at least one star was wooed from within the calming environs of practitioners' wellness centers. Margolis said Jennings is adamant that did not occur.

A letter from the attorney general's office warned Abundance members that their involvement could run afoul of the Board of Naturopathic Medicine. "A doctor's solicitation of patients to join a pyramid club can result in discipline by the state board," the letter said.

"This particular group of women was focused on fundraising to support other women's projects," Stender said. "It's an admirable concept, and I think that's what makes it so attractive."

Problem was, she continued, the "fundraising" was unsustainable and abundance abounded only for those lucky folks at the top.